My friend Micah recently introduced me to a new website called Steemit. He told me “ You are a writer you could really rock this platform with different articles.” I took a quick look at Steemit.com to get an idea of what it is and did some research on. If you have ever wondered what is Steemit or Steem here is a technical breakdown! Steem is the fundamental unit of account on the Steem blockchain. All other tokens derive their value from the value of STEEM. Generally speaking STEEM should be held for short periods of time when liquidity is needed. Someone looking to enter or exit the Steem platform will have to buy or sell STEEM. Once STEEM has been purchased it should be converted into SP or SMD to mitigate the impact of dilution over the long-term. STEEM is constantly increasing in supply by 100% per year due to non-SMD incentives. Someone who holds STEEM without converting it to SP is diluted by approximately 0.19% per day. While the rate may appear high, for transactions that take less than 10 days, it is still cheaper than credit card processing fees. Furthermore, the daily token creation is insignificant next to the daily volatility.
Someone who buys Bitcoin or any other cryptocurrency and sells it 10 days later could easily lose 3% or more due to price fluctuations. Someone who buys bitcoins then sells it the same day will usually pay more than 0.4% in market fees alone. In other words, the inflation rate is effectively insignificant during the period of time the typical individual will hold STEEM.
The majority of inflation is actually an accounting artifact rather than true reallocation of wealth. 90% of non-SMD inflation is distributed back to existing holders of STEEM proportional to the STEEM value of their SP balance, making inflation more of a split. Only about 10% of non-SMD inflation redistributes ownership in the network. An incentivized, blockchain-based social media platform. Collectively, user-generated content has created billions of dollars’ worth of value for the shareholders of social media companies, such as Reddit, Facebook, and Twitter. I n 2014, Reddit hypothesized that its platform would be improved if everyone who contributed to reddit.com by posting stories, adding comments or voting were rewarded with a fair share in Reddit, Inc1. Steem aims to support social media and online communities by returning much of its value to the people who provide valuable contributions by rewarding them with cryptocurrency, and through this process create a currency that is able to reach a broad market, including people who have yet to participate in any cryptocurrency economy.
There are some key principles that have been used to guide the design of Steem. The most important principle is that everyone who contributes to a venture should receive pro-rata ownership, payment or debt from the venture. This principle is the same principle that is applied to all startups as they allocate shares at founding and during subsequent funding rounds.
The second principle is that all forms of capital are equally valuable. This means that those who contribute their scarce time and attention toward producing and curating content for others are just as valuable as those who contribute their scarce cash. This is the sweat equity principle2 and is a concept that prior cryptocurrencies have often had trouble providing to more than a few dozen individuals.
The third principle is that the community produces products to serve its members. This principle is exemplified by credit unions, food co-ops, and health sharing plans, which serve the members of their community rather than sell products or services to people outside the community.
The Steem community provides the following services to its members:
- A source of curated news and commentary.
- A means to get high quality answers to personalized questions.
- A stable cryptocurrency pegged to the U.S. dollar.
- Free payments.